Highlights

• U.S. imposes tighter controls on advanced semiconductor technologies to limit China's AI and military computing capabilities.
• China responds by banning exports of key rare earth minerals like gallium and germanium, targeting U.S. technology sectors.
• Trade restrictions reveal complex geopolitical challenges in global technology and mineral supply chains.

Eversheds Sutherland, (opens in a new tab) a multinational law practice, highlights the escalating trade tensions between the U.S. and China, focusing on new export restrictions targeting semiconductors and critical minerals. The U.S. has imposed tighter controls on advanced semiconductor technologies, including equipment, software, and high-bandwidth memory, aimed at limiting China’s capabilities in AI and advanced computing for military applications. In response, China has introduced bans on key rare earth minerals such as gallium and germanium, which are essential for semiconductor production, specifically targeting the U.S. The analysis underscores the disruptive impact of these restrictions on global supply chains, with businesses needing to secure alternative sources and navigate complex compliance requirements.

While the report effectively details regulatory developments and their immediate implications, it overlooks broader structural issues in the global rare earth supply chain. It does not critically assess the feasibility of rapidly diversifying away from China, which dominates over 90% of rare earth processing and magnet production. Additionally, it downplays the environmental and logistical challenges of establishing alternative supply chains in countries with minimal infrastructure or expertise.

The analysis assumes that business adjustments can mitigate geopolitical tit-for-tat measures but avoids addressing how these restrictions might exacerbate vulnerabilities in global industries reliant on rare earths and semiconductors. The lawyers downplay the profound, fundamental implications of the China rare earth complex, controlled by the Chinese government and Chinese Communist Party. Of course, this is a law firm’s analysis, and they must remain focused and as measured as possible.

A deeper exploration of long-term solutions, such as building robust processing infrastructure outside China or fostering international cooperation, would provide a more comprehensive view of the evolving landscape. Importantly, this topic necessitates an uncomfortable discussion in Western circles: the reality is that a market-based approach will likely not be enough to change the situation.

See their analysis (opens in a new tab).